Business optimism for the September quarter 2012 has plummet as a result of growing uncertainty over interest rates and continued pressure from the high Australian dollar.
Dun & Bradstreet’s latest Business Expectations Survey reveals projections for sales and profits have fallen 11 points, a significant contrast to the five quarter high in sales expectations for the June quarter. One in four firms now anticipates a decrease in sales during the September quarter and a similar number expect to deliver lower profits.
The fall in sentiment comes as one in three Australian businesses (35 per cent) expect some form of negative impact from the high dollar, up nine percentage points in one month. Likewise, 32 per cent of executives cite interest rates as the key influencing factor on operations in the quarter ahead, a five percentage point rise since March.
Concern over interest rates is rising most dramatically among retail with 40 per cent indicating interest rates will have the biggest impact on operations in the coming quarter, a jump of 17 percentage points from previous figures.
Adam Siddiqu, D&B’s director of business development, said the drop reflects continued uncertainty in the global and local economy.
“Recent news out of the United States, United Kingdom and Europe is fuelling the current level of uncertainty, as Australian firms consider the potential flow on effects of continued high unemployment, a double-dip recession and possible defaults by countries such as Greece,” he said.
“Closer to home, the pressure of the high Australian dollar continues to be felt by exporters, while other firms are being hit hard by continued conservatism in spending by both business and consumers.”
“All eyes will be on the Reserve Bank on Tuesday as business wait to see if the expected rate cut comes to fruition and if lending institutions follow the RBA’s lead. However, the expected fall in interest rates is doing little to appease the concerns of Australian businesses. This is particularly the case for troubled sectors of our economy which may need more than a drop in interest rates to counteract the multitude of downward pressures impacting operations.”